The chief executive of Numis has ruled out taking on the chairmanship of the stockbroker he founded after announcing that he was stepping down as part of an unorthodox succession plan.
Oliver Hemsley, who has headed the group for 25 years and owns an 8 per cent stake, said that he would step down as chief executive this autumn, but would stay on as a full-time executive director.
He will also carry on receiving the same salary, in spite of dropping responsibility for running the firm. His total package last year was £879,000.
Alex Ham, who runs the corporate broking division, and Ross Mitchinson, head of equities, are to be appointed joint chief executives, a division of responsibilities that is rare in UK listed companies. Boohoo.com, the fashion retailer, and Harwood, the wealth manager, have split chief executive roles.
Mr Hemsley rejected any suggestion that his move could be a stepping stone to the chairmanship. The incumbent, Gerald Corbett, is leaving next February, with no successor yet decided.
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“I’m not going to be chairman. I refer you to Mr Dobson,” Mr Hemsley said, referring to the controversial recent elevation of Michael Dobson from chief executive to chairman of Schroders, a move that led to strong resistance from some shareholders because it breached board best practice rules.
He also denied that his continuing presence in a full-time role would cramp his two successors or threaten their authority. “They’ll be in charge. I won’t be second-guessing them at all.
“I’m freeing myself up to spend more time looking after clients and talking to clients. It’s also important to pass things on to the next generation.”
Mr Ham and Mr Mitchinson are 33 and 39, respectively, while Mr Hemsley is 53. There is no suggestion that corporate governance rules have been breached at Numis. Indeed, as an AIM-listed company, it is not subject to the corporate governance code, although once the changes take effect, the executives will outnumber the independent directors on the board by six to four, a circumstance that may concern the Financial Conduct Authority, the City regulator, which has yet to approve the plan.
Mr Corbett hailed Mr Hemsley’s tenure. “His leadership, energy and drive have been invaluable to the success of Numis and I am delighted that he will remain on the board so that the company can continue to benefit from his vast experience,” he said.
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Yesterday, Numis was explaining the proposed changes to its largest institutional shareholders, which include Aviva, the insurer, GVQ, the fund manager, and Unicorn, the asset manager.
While other niche brokers have struggled in recent years, Numis has been more successful, advising and floating corporate clients. In its interim figures, also released yesterday, it reported record revenues and a 35 per cent increase in adjusted pre-tax profit to £19.3 million in the six months to March. It raised £1.2 billion of capital for clients via 27 equity issues, including ten flotations. It also advised on 14 completed takeovers. It noted that the second half had started well.
Shares in Numis rose 1½p to 210¼p.
Old-fashioned virtues in the modern City
The main thing you need to know about Oliver Hemsley comes from his response to a question put to him once by this newspaper (Martin Waller writes).
In our regular profiles of industry and City worthies, we always ask whether money motivates them. Most chief executives witter on about the sheer joy of enhancing shareholder value or the pleasures of building a management team.
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Mr Hemsley’s response was unequivocal: “Yes.” Or, as he expressed it by return email: “YES.” This is hardly an uncommon view in the City, but few are as direct.
He is an old-fashioned relationship broker and the success of Numis in a desperately difficult market comes from taking care of those corporate clients, advising them and keeping an ear open in the market on their behalf.
It is the approach that was adopted by Cazenove, the venerable broker, in its heyday, and it was the way the City did business before the Big Bang and the arrival of brash “bulge bracket” American banks more interested in their own bottom lines and less concerned about potential conflicts of interest with their clients.
Today, Numis has 185 corporate clients. It is 40 per cent-owned by its directors and employees and is a strong payer of dividends to motivate them, a policy from which Mr Hemsley will have benefited personally. “He’s made a lot of money and he wants to enjoy his life,” a friend said yesterday. His decision to stick around as a director comes as no surprise. “He’s the brand. He gets the big fees in.”
He left school after A levels and landed a lowly job at a Lloyd’s insurance broker, Brockbank. He founded his own company in 1990 and then bought Raphael Zorn, an old-fashioned City broker. He sold the first business in 2000 and concentrated on Numis.
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Some have described him as ruthless and Numis has seen its share of involuntary departures. He is probably no more cold-hearted than the average operator in the industry, saying that he is merely highly ambitious for his company.